Are we really ready for an Isa revolution? Half have never switched savings - and most say new £15k limit won't impact how they save

An Isa revolution arrived today as the tax-free savings limit was hiked to £15,000, but many savers are missing out on better returns through their own actions.

Half of savers have never switched their savings provider while a third have had their money with the same bank or building society for more than a decade, research by Bank of Cyprus UK shows.

Meanwhile, two thirds of savers quizzed in a separate study by Virgin Money said the changes would make
no difference to how likely they were to either take out an Isa, or
increase the amount they have in one.

The new limit is two-and-a-half times larger than the previous £5,940 allowance, and is equivalent to saving £1,250 per month - compared to the previous £495 a month.

Savers pain: Many just stick with the same provider, perhaps because of a lack of enticing savings accounts elsewhere

Whether they have plenty to save or only a little, by sticking around with the same
provider, many could be missing out on the best rates and making the
most of their savings, Bank of Cyprus UK warns.

It
says the inertia is largely down to lack of enticing savings deals
currently available. Despite the emergence of some best buy deals in
recent weeks, ahead of the new £15,000 limit coming into force today,
rates are still far lower than previous years.

Its survey found 22 per cent have never reviewed their savings rate while a further 26 per cent do so just once a year.

Loyalty is also an important factor, with 55 per cent saying they would be encouraged to stick with their provider if they were getting better rates than new customers.

Tony Leahy, of Bank of Cyprus UK, believes the new Isa allowance which starts from tomorrow will encourage people to review their accounts to make the most of the new tax-free limits.

However, separate research by Virgin Money shows new super Isa rules are unlikely to make much difference to the majority of savers.

Two thirds said the changes would make no difference to how likely they were to get an Isa, or put more into one.

The research shows 43 per cent do not understand the difference between cash Isas and investing stocks and shares Isas, despite the fundamental differences between the two.

Even though they potentially offer a higher return for savers in the current economic environment, one of the reasons for the lower take up of stocks and shares Isas is the perceived complexity these products bring, according to Virgin Money.

The survey found 60 per cent did not find it easy to understand how their money would be invested and what fees are involved.

Of those who already hold a stocks and shares Isa, one in five admitted that they don’t really understand how they work.

But on a more positive note, a younger generation of savers has emerged in recent years, according to Isa provider Scottish Friendly.

Its findings show 66 per cent of those aged between 18 and 24 are saving, with the average amount being £204 per month.

As a result, the average person in this age group has roughly £3,200 in savings, even though more than half have no set reason as to why they are saving.

Interestingly, while 66 per cent of youngsters are putting money aside, 44 per cent admit to still relying on the Bank of Mum and Dad to help them when their money runs out.

Neil Lovatt, director of financial products at Scottish Friendly, said: 'The report does seem to point to a case of the haves and the have not’s, which is understandable at a young age when you are just starting out on building a career.

'The good news is that those who do have money left over each month are choosing to save rather than splurge.'